Daily Price Outlook
Yesterday, gold prices rose by 0.55%, reaching $1980, the highest level in six days, thanks to three consecutive sessions of growth. Federal Reserve Chairman Jerome Powell acknowledged that inflation had somewhat decreased since last year, but still has a long way to go to reach the Fed's 2% goal.
Despite this, Powell suggested that the Fed may not change rates at its September meeting, instead waiting for incoming data before considering future rate hikes. This prospect of the Fed nearing the end of its rate-hike cycle is the reason behind today's increase in gold prices. Gold is particularly sensitive to rising interest rates, as they make it more costly to hold non-yielding bullion.
The European Central Bank is anticipated to increase interest rates by 25 basis points on Thursday to combat inflation and meet its targets. However, concerns about a slowdown in the Eurozone's economy may lead to a pause in rate hikes, despite the possibility of the ECB raising borrowing costs in July and September.
The market is waiting for ECB President Christine Lagarde's statements to gain insight into future monetary policy. A hawkish stance could limit gains in the gold price.
China, the largest gold consumer, has indicated additional support for its real estate sector and domestic consumption after COVID recovery. This could further increase the gold price. Therefore, gold traders are keeping an eye on China's additional stimulus plans.
Market participants are also closely watching the first readings of the US Gross Domestic Product (GDP) for Q2, the core Personal Consumption Expenditure (PCE) Price Index MoM, Durable Goods Orders, and Initial Jobless Claims data. These figures may impact USD price dynamics and could influence short-term trading opportunities in the gold market.
Gold (XAU/USD) Technical analysis
The gold price continues its upward momentum, approaching the critical level of $1977.25 and attempting to break through it. A successful breach of this level would indicate a potential end to the recent bearish correction and signal a return to the main bullish trend. Subsequently, the price may target gains starting at $2000.00 and potentially extending to $2016.90.
Given the current market dynamics, a bullish bias is suggested for today, supported by the EMA50 providing underlying support. However, it is crucial to closely monitor the price's consolidation above $1977.25, as a failure to do so might impede the expected rise and lead to a potential decline.
The anticipated trading range for today is expected to be between the support level of $1965.00 and the resistance level of $1995.00.
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